MBA COMPREHENSIVE EXAMINATION

Financial Management
July 18, 2021

CASE #1 - FS Analysis/Pacific Stores

You have been hired by Atlantic Bank as a financial analyst. One of your first job
assignments is to analyze the financial condition of Pacific Stores, Inc. You are
provided with the current year's Statement of Financial Position of Pacific Stores.
Your assignment calls for you to calculate certain financial ratios and to compare
these calculated ratios with the industry average ratios that are provided.

Pacific Stores, Inc.

Statement of Financial Position
December 31, 202X

Cash 5,000,000.00
Accounts Receivable 20,000,000.00
Inventory 40,000,000.00
Property, Plant & Equipment (net) 135,000,000.00
Total Assets 200,000,000.00

Accounts Payable 15,000,000.00

Notes Payable - current 20,000,000.00
Long-term Debts 100,000,000.00
Shareholders' Equity 65,000,000.00
Total Liabilities & Shareholders' Equity 200,000,000.00

Pacific Stores, Inc.

Income Statement
For the year ended December 31, 202X

Net sales (all credit) 300,000,000.00

Less: Cost of Goods Sold 250,000,000.00
Earnings Before Interest & Taxes 50,000,000.00
Less: Interest Expense 40,000,000.00
Earnings Before Taxes 10,000,000.00
Less: Taxes (40%) 4,000,000.00
Net Income 6,000,000.00

Industry Averages for Key Ratios

Accounts Receivable Turnover ratio 12 times
Average collection period (365 days) 30 days
Average age of inventory (365 days) 20 days
Current ratio 1.50
Quick ratio 1.25
Times Interest Earned Ratio 8.5

Calculate the following:

1. Current ratio
2. Quick ratio
3. Inventory turnover (assume the beginning and ending inventories are
the same
4. Average age of inventory (use 365 days)
5. Receivable turnover (assume the receivables at the start and at the
end of the year are the same).

6. Average age of receivables (use 365 days)

7. Times Interest Earned Ratio

Industry Averages for Key Ratios

Average collection period (365 days) 30 days
Accounts Receivable Turnover ratio 12 times
Average age of inventory (365 days) 20 days
Current ratio 1.50

Quick ratio 1.25

Times Interest Earned Ratio 8.5

Calculate the following:

1. Current ratio
2. Quick ratio
3. Inventory turnover (assume the beginning and ending inventories are
the same).
4. Average age of inventory (use 365 days)
5. Receivable turnover (assume the receivables at the start and at the
end of the year are the same).
6. Average age of receivables (use 365 days)
7. Times Interest Earned Ratio

LABEL & COLOR CODE YOUR ANSWERS AND SHOW THEM ALL BELOW.
CASE #2 - SPEEDY Corporation

Speedy was incorporated on November 20, 202A and began operating on January 2, 202B
The Statement of Financial Position as of the beginning of operation is shown below:

SPEEDY Corporation
Statement of Financial Position
as of January 2, 202B
ASSETS
Cash 2,000.00
Supplies 24,400.00
Land 12,000.00
Building & Equipment 300,000.00
Total Assets 338,400.00

LIABILITIES & SHAREHOLDERS' EQUITY

Accounts Payable 10,400.00
Loans Payable (Bank Loan) 24,000.00
Ordinary Shares 304,000.00
Total Liabilities and SE 338,400.00

You were hired to prepare the financial statements of the business for the year 202B.
The following information were made available to you:
Cash Receipts and Disbursements for 202B:
Cash Receipts
Cash Sales 176,450.00
Accounts receivable collection 64,750.00
Cash Disbursements
Salaries 85,750.00
Heat, light and power 15,000.00
Additional supplies 52,600.00
Selling & Administrative Expenses 28,375.00
Interest (12% per annum on the bank
loan payable June 30 & Dec. 31) 2,880.00
Payment of bank loan 12,000.00
Payment - Accounts Payable 10,400.00

1. At the end of 202B, the company owed $9,875 for the purchase of photocopy
supplies, for which it had not yet paid.
2. The annual depreciation expense on the building and equipment was $15,000
3. At the end of 202B, Speedy Corporation was owed $11,000 for copying services
by customers who had not yet paid. Speedy expected that all of these customers
would pay within 30 days.
4. An inventory taken of the supplies at year end revealed that the year's cost of
supplies was $60,250.

REQUIRED: Prepare the Company's properly classified

A. Income Statement
B. Statement of Financial Position

Prepare ALL your financial statements below.

Income Statement
Sales 252,200.00
Cost of supplies 60,250.00
191,950.00
Expenses:
Depreciation exp. 15,000.00
Selling and administrative expenses 28,375.00
Salaries 85,750.00
Heat, light and power 15,000.00
Interest Expense 2,880.00 147,005.00
Income before income taxes 44,945.00
Income tax expense 11,236.25
Net income 33,708.75

Statement of Financial Position

ASSET
Current Asset
Cash 36,195.00 Liabilities
Accounts Receivable 11,000.00 Accounts payable
Supplies 26,625.00 Loans Payable
Total Current Asset 73,820.00 Income Tax Liability
Total Liabilities
Non- Current Asset
Land 12,000.00
Building and Equipment 300,000.00 Owners Equity
less: Accumulated Dep. 15,000.00 285,000.00 Ordinary Shares
Total Non-current asset 297,000.00 Retained Earnings
Total Asset 370,820.00 Total OE
Total Liab And OE
Accounts payable 9,875.00
Loans Payable 12,000.00
Income Tax Liability 11,236.25
Total Liabilities 33,111.25

Owners Equity
Ordinary Shares 304,000.00
Retained Earnings 33,708.75
337,708.75
Total Liab And OE 370,820.00